Itunes Music Pricing

Josefina Anorga Carlos Albizu University iTunes euphony Pricing Adopting a vari subject determine policy top executive increment the sales tax of orchard apple trees music Store. Pricing the more touristed songs at a high(prenominal) worth and the less popular ones at a lesser rate would present higher sales for the lesser popular ones. Thus making up for the lissome drop in sales of pricey tracks and ultimately working towards overall change magnitude tax receiptss. Although most songs with a higher price point experienced nearly 21 % drop in sales, the 29 % increase in price made up for the loss.Moreover, sales for the top 40 songs redeem a relatively inelastic crave and argon expected to be unimpressed by the price rise. The customers of these popular songs are price-insensitive and hence make a great contribution to the change magnitude revenues since the optimal price bathroom be marked at a mensurate much higher than the marginal cost. With the tiered p rice body structure, iTunes Music Store would also be commensurate to tackle the change magnitude competition by the major wireless companies go transferable harmony to the cell phone subscribers.Variable price intelligently supports the maximized returns by allowing the conjunction to adjust the value of per-unit prices to increase revenues and encourage the potential customers to be allured by the lowered prices of specific tracks. orchard apple trees iTunes Music Store efficiency adopt other strategies such as Product Bundle Pricing outline to make a bundle of diametric songs (both popular and less popular tracks) and give them at reduced prices. This result not exclusively help the sales of the indisposed moving sound tracks, but also work as a revenue generator by right smart of beguiling potential consumers.The bundling strategy will help in increasing pay by extracting additional consumer surplus. Another strategy that the company may adopt is the clothed p ricing policy. This approach will demand the company to charge higher prices for the songs since they can alone be downloaded exclusively on the iPod. This will ensure higher revenue from the existing customer downloads, however the company might not be able to increase the iPod sales following this pricing policy. The company may implement promotional pricing strategies such as offering some specific songs at discounted prices along with the purchase of the new iPods.This would not only boost the sales of the iPods, it would also move in the customers to buy the usually expensive songs at discounted rates. This would directly promote the symphony sales thus increasing revenues. While the covariant pricing strategy is seen as way to increase revenue, the sophisticated pricing structure poses high perils and potential costs to the company. With the orgasm of the information technology and the rise in the unofficial file swapping networks, the company is al determine at a high put on the line of losing consumers, who can easily download pirated symphony free of cost.Moreover, since a major get by ( somewhat $0. 70) of the revenue per song goes to the record companies that gain the right to the songs and the iTunes Music Store gets a very small share of the dough from the downloaded euphony, the company cannot afford to lose remuneration from the sales of iPods. A complicated pricing structure poses a great risk of losing the customers to other companies, which will adversely rival the sales of the iPods also. With the music companies tying up with other competitors such as Amazon. om, who cheat the music catalogs wrapped in digital rights management software, implementing the complicated pricing, would only misbegot losing the sales and promoting the unethical practice of unauthorized free downloads. Apples pricing objective of straight pricing is not directed at maximizing revenues collectible to the sale of downloaded music. The company is enticed to sell the downloaded music at low prices in auberge to promote the sale of iPods. Apple follows a profit maximizing policy for the iPods revenue stream and so follows a stable policy for the attracting the customers by a flat price for the downloaded music.However, the record companies are only concerned about maximizing revenues from the downloaded music and they are not concerned about the revenue from the sale of iPod. The iTunes Music hive away is a service that Apple offers to its consumers who bid to buy the third company music and audio books over the internet. Moreover, with no subscription fee and broad range of personal rights organism offered with the music content, including playing the music on an unlimited number of iPods, Apple is clearly not digested at generating change magnitude revenues through music downloads (Forms 10-K).Apples expertness to control the pricing of downloaded music is possible to change in the future. Third party content sub mitrs require Apple to provide variable pricing policy along with adequate bail mechanism. If the company continues to focus on revenue maximization of iPod ironware sales considering the music content download as a peripheral disdain activity, the recording companies might get provoke due to the absence in increased revenues.The company might lose its supplement over music companies owing to the increasing competition. With other companies like Amazon ready to sell the music with embedded security features, the music companies are likely to fall in with companies thus adversely affecting iTunes Music store business.References Forms 10-K, United States Securities and Exchange focus Apple Computer, Inc. Retrieved on August 18, 2010 from http//www. sec. gov/ narration/edgar/data/320193/000104746904035975/a2147337z10-k. htm